China Regulors Threaten E-Commerce, Group Buying 官方监管威胁到电子商务与团购业务
After standing aside and letting its online sector develop largely unhindered for the last decade, China is suddenly showing a worrisome trend of trying to regulate everything on its often unruly Internet, a move that, while needed, could also interfere with market forces. In separate developments on the same day, media are reporting Beijing is preparing to regulate both its group buying sites as well as its e-commerce sector to bring more order to these spaces that have become ultra-competitive in the last 1-2 years. (group buying article; e-commerce article) In this case the reason behind each move is unrelated. For group buying, the reason seems simply to be a desire to regulate an industry that has become ultra-competitive, with quality control virtually non-existent and many players teetering on the brink of closing. (previous post) For e-commerce, the issue is directly related to a massive fee hike last week by Alibaba’s Taobao Mall, China’s leading B2C site, that led to an uprising by smaller merchants who complained they were being targeted for elimination from the site. These two new rounds of regulation for major emerging sectors follow other recent reports that China will soon regulate the vibrant micro-blogging space, and months after it issued its first round of electronic payment licenses and as it prepares to issue online mapping licenses. There definitely seems to be a trend emerging here, which looks a bit worrisome in light of Beijing’s past record at heavy-handed interference in emerging tech sectors. In one case a few years back, Beijing’s heavy regulatory hand effectively killed a vibrant SMS industry that was once a major source of revenue for the likes of Sina (Nasdaq: SINA), Sohu (Nasdaq: SOHU) and NetEase (Nasdaq: NTES). It has also attempted to regulate online games from time to time, which may be partly responsible for that industry’s unexciting growth profile of recent years after years of explosive growth. While some form of direction is certainly needed to bring order to the unruly e-commerce and online auction sectors, it’s far from clear to me that this direction needs to come from Beijing, which instead would be better advised to provide some “guidance” and let market forces do the main work.
Bottom line: New campaigns by Beijing to regulate e-commerce and online auctions are misguided efforts that will ultimately severely hamper growth in both sectors.
Related postings 相关文章:
◙ Taobao Mall’s IPO March Collides With Merchant Uprising 淘宝商城IPO或因商户“起义”被推迟
◙ Group Buying Turmoil Grows With 55tuan Layoffs 窝窝团撤站裁员 团购业整合在即
◙ Investors Punish Sina for Slow Weibo Progress
